The Stock Exchange of Hong Kong arrives

During the past two decades, The Stock Exchange of Hong Kong Ltd. has experienced a dramatic growth from a local exchange dominated by Hong Kong real property companies into the diversified international stock market that it is today — taking first place worldwide in both the number of initial public offerings and the amount of capital raised in 2009. As markets become more global, issuers have a wider range of choices of geographic regions in which to list. When international companies select a listing venue, the Hong Kong Stock Exchange (SEHK) is the Asian stock market that they consider more and more frequently, and what is happening there is affecting the functioning of markets throughout the world.

Hong Kong’s first stock exchange, a largely unregulated market, was formed in 1891, and it has matured with the development of Hong Kong. (Note: Historical data were obtained in large part from the SEHK article, “A Glimpse of the Past,” issued in August 2009, and Ernst & Young’s “Global IPO Trends 2010″ report.) From the 1950s through the early 1970s, soaring real estate prices led to robust growth of Hong Kong’s stock market. The Hang Seng Bank created the Hang Seng Index of 33 representative stocks in 1969. This rapid growth was halted when, in 1973, the Hang Seng Index began to plunge, from 1,774 points to 177 by December 1974, causing the government to pass legislation mandating greater protection for investors.